12 Things That New Landlords Don’t Know
Renters Warehouse Blog
Are you a new landlord, or thinking of investing in a rental?
Regardless of if you have been thinking about investing for a while or if you’ve been thrust into this position unexpectedly (accidental landlord, anyone?), there’s often a learning curve when you’re first getting started.
The good news though, is that you don’t need to learn everything the hard way. Instead, you can learn by observation. By learning from others who have been there, done that –and by looking into common mistakes other first-time landlords often fall victim to, you can sidestep a host of issues when you’re first starting out, helping to make your landlord experience smooth, successful, and hassle-free.
Don’t make these mistakes! Here’s a look at some things that first-time landlords often don’t realize when they’re first starting out.
- That You Should Treat Your Rental Investments Like a Business
New landlords are often so caught up in the excitement (or chaos) of being a landlord that they end up failing to plan. But in order for your investments to be a success, it’s important that you’re intentional with your investments, and that you treat your rentals like a business from the start. This means setting clear goals and investment strategies from the beginning, complete with criteria for your investments, and benchmarks for cash flow. You should also try to get organized, and come up with a plan for accounting or bookkeeping as well. Treating your rental investments like a business, instead of a hobby, will help you to run your rentals successfully, allowing you to get the best returns.
- That Your Rental Listings Matter
Often, new landlords spend a lot of time sprucing up their rental unit, getting it ready to list, only to drop the ball when it comes to the listing itself. Your listing though is extremely important. The pictures you post and the descriptions you write are your opportunity to get noticed by a prospective tenant, so you should take care to create a listing that will help to set your rental apart from the rest. Make sure you include all of the helpful information that tenants need: your asking rent, the number of bedrooms, the area that it’s in, the number of bedrooms and bathrooms, and more. Take lots of great photos and upload those as well. Including photos for each of the main rooms, the bedrooms, and the bathrooms is important. Don’t forget a few exterior photos as well.
Likewise, where you list your rental matters. You’ll want to get your listing onto a wide range of different websites so that you can expand your search net as wide as possible and generate more interest.
- That an Airtight Tenant Screening Process is Vital
Another area where first-time landlords may be tempted to cut corners is the tenant screening process. Many new landlords feel that they can assess potential tenants on their own, no need to follow a documented protocol. But the truth is, gut feelings will only get you so far when it comes to tenant screening. It’s important to have a documented process that you follow for each applicant who makes it through to the final stages. Having a standard procedure that you follow, complete with questions that you ask each potential applicant, can help you to ensure that you gather all of the information that you need to make a decision on a candidate. It’ll also allow you to maintain consistency in the screening process, allowing you to ensure that you treat each applicant fairly and equally.
- That Having a Rental Application Can Save Time
Many new landlords skip over this step. But taking the time to create a rental application can actually help you to save time. By creating an application, and including a link to it in your online listing that you direct interested candidates to, you can streamline the screening process. You can have applicants indicate whether they are okay to undergo background, reference, and credit checks; and include preliminary questions (questions on income and employment) that can help to screen out candidates who aren’t qualified. A rental application can help you to weed through potential applicants, making the job of sourcing a tenant a bit easier.
- That the Lease is Extremely Important
Sure, most landlords know that the lease is important –if you have, say, ten properties. But the fact is, it’s not just experienced landlords who can benefit from a lease –every landlord should have one.
A lease will not only help to protect your interests, but will also help keep everyone on the same page and ensure that everyone knows exactly what to expect. What should you include in your lease? Your pet policy, smoking policy, the date that the rent is due and the amount, when late fees are levied, and how much they will be. You’ll also want to ensure that you document the condition of the property at the time of move-in, and include the move-out procedure for tenants as well.
You might even consider hiring a lawyer to draft up a lease for you or to look over yours once you have finished it, to ensure everything is enforceable.
- That It’s Important to Keep Good Records
While it might not be the most glamorous part of being a landlord, keeping records is important nonetheless. Good recordkeeping can help to make life easier for you, not to mention it’ll be easier when tax time rolls around. Getting organized and creating good systems now can also help to make it easier for you to expand your property portfolio in the future.
- That Being a Good Landlord Isn’t Hard
Being a good landlord isn’t hard, but it’s vitally important. No, this doesn’t mean that you should let the rent slide, but it does mean being professional, organized, and kind every step of the way. Often landlords don’t realize it, but how they behave will rub off on their tenants as well. Treat your tenants fairly, and they’ll be more apt to respond better as well.
Here are some things that all landlords should do:
- Familiarize yourself with landlord-tenant law
- Always be professional
- Keep the lines of communication open
- Don’t waiver on your lease
- Respect your tenant’s privacy
- Perform routine maintenance and repairs in a timely manner
Being a professional landlord can help to keep your tenants happier, which can lead to lower vacancy rates as well.
- That You Will Need to be Familiar With Landlord-Tenant Law
Being a landlord requires a fair amount of legal knowledge. Keep in mind that there will be a big learning curve when it comes to learning about housing laws and regulations. You will need to become familiar with state legislation as well. Landlord-tenant laws vary considerably from state to state, so be sure to get a good, up-to-date book, or bookmark a few reputable sites on landlord-tenant law. Issues like security deposits, evictions, notice before entry, and more all vary from state to state, and you’ll want to check the laws in your state to see what they are. You’ll also want to ensure that you’re familiar with legislation like the Fair Housing Act which prohibits landlords from discriminating against tenants based on their race, color, national origin, sex, religion, disability, or familial status.
- That Being a Landlord Can Be Time-Consuming
Being a good landlord isn’t hard, but it can be time-consuming.
Regardless of how well you plan to manage your rentals, you will essentially be on call 24/7. While you might have business hours, there will always be that one time an emergency occurs when it isn’t convenient to you. Being a landlord requires you to be available to tackle these emergencies, even in the middle of the night. It is important that you have your team of reliable contractors put together beforehand so when these emergencies arise, you aren’t caught off guard.
If you do find that you’re spending all of your free time on rental-related tasks or doing maintenance on the weekends, then you may want to consider outsourcing to a property manager. A good property manager will be able to handle the day-to-day tasks that are involved with being a landlord, and will also help you to operate in a way that’s in compliance with federal and state law. If you are finding the process of being a new landlord overwhelming or are simply looking to lighten your load, a property manager could be an ideal solution.
- That You Should Always Collect a Security Deposit
Many first-time landlords don’t realize the importance of a security deposit. A security deposit is funds that are paid by the tenant and held by the landlord (sometimes in a specific account), to be used after the tenant moves out to pay for any unpaid rent or to repair any damage caused by the tenant, their pets, or their guests.
Note: A security deposit is important, but legislation pertaining to security deposits varies considerably from state to state. For instance, there are limits that you’re allowed to charge, the timeline for returning a deposit, and in a few states, there are even requirements about the way that you hold a tenant’s security deposit. For example, in a handful of states, landlords must keep the tenant’s deposit in an interest-bearing account. Be sure to check your state’s legislation to see what the maximum amount is and what rules apply.
- That You Should Return the Security Deposit (Except in the case of unpaid rent or damage)
On the flip side, we have landlords who think that they can keep a security deposit if a tenant breaks the lease. But that’s not how security deposits work. Security deposits can only be applied to unpaid rent, or for damage that is caused by the tenant. They cannot be used to punish a tenant who broke the rental agreement.
Additionally, it’s important to note that while you can use a security deposit to fix damage –intentional and accidental, as well as for any unpaid back rent, you cannot apply security deposits to damage that is considered to be normal wear and tear. This means that in most cases, issues like faded curtains, worn carpet, or scuffed paint cannot be taken out of the security deposit.
- That Mistakes Will Happen
Finally, it is important to remember that mistakes will happen. Even experienced landlords make mistakes along the way. No matter how prepared you think you are, something can still go wrong. As time goes on you will make fewer mistakes and learn how to avoid them, but it’s important to ensure that you’re not caught off guard by them. Making a mistake doesn’t mean that you’re not cut out to be a landlord, instead, it’s just a normal part of the learning curve. It’s important to learn from them, and then move on.
At the end of the day, it’s all about finding a way to run your rental business most efficiently and profitably. By learning from the above misconceptions that landlords often have, you’ll be able to sidestep many common issues that first-time –and even experienced landlords run into. With the right approach, you’ll be able to start growing your rental portfolio, and finding success with your rental properties.
Are you looking to outsource your rental property management? Be sure to reach out to us today for your FREE rental price evaluation. See how much you could be getting for your rental.
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